Dubai office rents drop in the Q2 of 2020

UAE

The average Dubai office rents decreased by 7% in the second quarter of the year, as owners look to consolidate spaces and save money in light of the economic crisis caused by the Coved 19 pandemic.

According to the Dubai office market update for the second quarter of 2020, released by Knight Frank Middle East, head office rents across Dubai decreased by 6.8% in the year to the second quarter of 2020, while class A and city rents decreased by 5.9% and 7.8%, respectively, compared to the same period interval.

The average of Dubai office rents was AED 208 / sq.ft, and the average rent for the first class was AED 131 / sq.ft. The average citywide rents are 103 dirhams / sq. Ft.

The report said that during the last stages of the last quarter, while the level of occupant requirements increased, most activities focused on space enhancement or as a cost-saving measure, or a combination of the two.

It was also revealed that, in some cases, landlords were willing to consider rent reviews.

Market-level vacancies in the Dubai office rents market recorded 18.7% in the second quarter of 2020, a marginal decrease from 18.8% in the fourth quarter of 2019.

The report said that While currently, vacancies on most major projects are still relatively low, over the course of the year with the delivery of additional supplies, they are likely to see an increase in the key vacancy rate.

It is currently estimated that there are 29 active projects within Dubai, valued at $ 4.85 billion, with delivery dates until 2024, either under implementation or in the study or design phase.

According to data from the Dubai Statistics Centre the emirate’s GDP grew by 2.2 percent in 2019, up from 2.1 percent in 2018. However, as a result of the Covid-19 pandemic on global economic activity, Dubai’s GDP is expected to contract by as much as 7.4 percent in 2020.

While Oxford Economics forecasts indicate that Dubai’s GDP is not expected to return to 2019 before 2022.